Furthermore, just 16% of people realise that by disclosing their health and lifestyle factors they could be eligible for an enhanced annuity, which could boost their income.

Lack of planning

Phil Brown, head of retirement propositions at LV=, says the concern is that most people will simply buy their annuity from the provider they have saved their pension with, not realising this might not be the best value option.

Tony Stenning, head of UK retail at BlackRock, says many people "have lowered their aspirations for the kind of lifestyle they want in retirement", which could be a result of a lack of planning and information.

Brown says it is important that pre-retirees do not simply choose the "familiar" or easy option.

"Unlike other major financial decisions, once someone chooses how to structure their retirement income, they can't typically review their decision further down the line. To ensure retirees are able to maximise their pension funds, it's crucial they selection the solution that offers them the level of income and flexibility they need," he adds.